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Profile & History

Profile

B3 S.A. – Brasil, Bolsa, Balcão is one of the world’s largest financial market infrastructure providers by market value. The services it offers range from exchange trading, clearing and other post-trade services to registration of over-the-counter (OTC) transactions and of vehicle and real estate loans.

B3 was established in March 2017 when the securities, commodities and futures exchange activities of BM&FBOVESPA were combined with the activities of Cetip, a provider of financial services for the organized OTC market. This combination consolidated the Company’s position as a financial market infrastructure and enabled it to extend the range of services and products offered to customers while creating efficiencies for the Company and for the market.

In the markets for exchange-traded products B3 develops, implements and operates trading and post-trading (clearing and settlement) systems and services for equities, equity, financial and commodity derivatives, bonds, federal government debt securities, spot currencies and agricultural commodities. It provides a listing service and acts as central securities depository (CSD) for the assets traded in its environments. It also offers software and index licensing services. Its operations in these markets require constant investment in technological infrastructure, as well as control and management of the risks inherent in these activities in order to ensure they operate efficiently and securely.

For unlisted products traded bilaterally on the OTC market, such as financial instruments issued by banks and customized derivatives, B3 offers the infrastructure for registration of these trades by market participants.

In addition, through its vehicle and real estate financing unit the Company offers products and services that streamline local credit analysis and approval, making access to secured loans easier, faster and safer.

Alongside its operational, technological and risk management excellence, B3 also boosts the dynamics of the markets it manages by means of innovation and product development, as well as educational programs for the general public.

B3 is a public company traded under ticker symbol BVMF3 on the Novo Mercado premium listing segment for companies committed to the highest standards of corporate governance. Its stock is tracked by the Ibovespa, IBrX-50, IBrX and Itag indices, among others.

The Company is headquartered in São Paulo and has units in Rio de Janeiro and Alphaville, Brazil. It also has representative offices in New York (USA), London (UK) and Shanghai (China) to support local market participants in activities with foreign customers and relations with regulators, and to disseminate its products and governance practices to potential investors.

History

The origins of B3 are rooted in the history of Brazil’s leading capital and financial market infrastructure institutions, and above all reflect the development of these markets and the respective regulatory framework.

In March 2017 BM&FBOVESPA S.A. Securities, Commodities & Futures Exchange merged with Cetip S.A. Organized Markets. The result was B3.

Today, besides being the only securities, commodities and futures exchange operating in Brazil, it is also the leading depository for fixed-income securities in Latin America and the leading clearinghouse for private assets in Brazil.

The sections below offer more information about the history of the organizations that gave rise to B3.
 

 
BM&FBOVESPA S.A. Securities, Commodities & Futures Exchange

The integration of BM&F with Bovespa Holdings, approved on May 8, 2008, gave rise to BM&FBOVESPA S.A. Securities, Commodities & Futures Exchange, then already one of the world’s largest exchanges in terms of market value. More information about BM&F and Bovespa Holding can be found in Chapter 7 of the Company’s Reference Form.

With a totally verticalized and integrated business model, BM&FBOVESPA began operating in the trading and post-trading of equities, bonds and derivatives, publication of quotations, production of market indices, development of systems and software, issuer listing and securities lending, as well as acting as a central securities depository (CSD). Its systems made possible the buying and selling of securities, especially equities, the transfer of market risks via hedging, price arbitrage between markets and/or assets, investment diversification and allocation, and position leveraging, all of which contributed to Brazil’s economic growth.

Some events and initiatives stand out in the history of BM&FBOVESPA. The first is the relationship with CME Group, whose chief outcome was technological cooperation resulting in the development of a new multi-market and multi-asset electronic trading platform for derivatives, equities, foreign exchange and fixed income, called PUMA Trading System. This platform, developed on the basis of CME Group’s technology, began operating in the derivatives and spot foreign exchange markets (BM&F Segment) in 2011, in the stock market and equity derivatives market (Bovespa Segment) in first-half 2013, and in the private fixed-income markets in July 2014.

Another transformational project is the new BM&FBOVESPA Clearinghouse, presented to the markets together with CORE, the new system for calculating risk. This new platform will integrate the post-trade infrastructures for the different markets managed by BM&FBOVESPA. It is already operating in the derivatives market (BM&F Segment), where it went live in August 2014, and will be extended to the equity and corporate bond markets in 2017.

In 2014 BM&FBOVESPA completed construction of a new data center. Located at Santana de Parnaíba, the facility houses the Company’s infrastructure more efficiently and robustly, and is equipped to support future growth.

In April 2016 the Boards of Directors of BM&FBOVESPA and Cetip approved the financial terms for a combination of the two companies’ operations. These terms served as a basis for the proposals submitted to and approved by their respective shareholders in special general meetings held on May 20, 2016.

In March 2017 the business combination between BM&FBOVESPA and Cetip was approved by the competent regulatory authorities: the Central Bank of Brazil, the Securities & Exchange Commission of Brazil (CVM), and the Administrative Council for Economic Defense (CADE), Brazil’s antitrust authority.

More information about the history of BM&FBOVESPA can be found in Chapter 7 of the Company’s Reference Form.

 
Cetip S.A. Organized Markets

Cetip was created in response to demand from the financial market through the establishment of a nonprofit involving participants in the private fixed-income market with the support of the Central Bank. It was founded in 1984 and began operating in 1986.

The demutualization of Cetip Associação was approved in May 2008 and took effect on July 1, 2008. As a result, it ceased to be a nonprofit and became a for-profit business corporation.

This process also led to the absorption of ANDIMA SND, making Cetip the sole owner of the rights to the National Debenture System (SND), including contracts and intangibles, and to the Securities Distribution System (SDT).

After demutualization and reorganization, Cetip was taken public in October 2009.

At the end of 2010, Cetip acquired 100% of GRV Solutions, the company responsible for processing auto loan information and for custody in these transactions. The acquisition doubled Cetip’s size and enabled it to extend the scope of its operations to consumer credit, support for lending operations, and the supply of information and solutions to lenders.

In July 2011, ICE Overseas Limited, a member company of the Intercontinental Exchange group, one of the world’s largest exchange operators, took a stake in Cetip’s equity to begin a partnership in strategic positioning and technology. In the same month, Cetip began offering collateral management services in partnership with Clearstream, a subsidiary of Deutsche Börse and global leader in collateral services.

In May 2012, Cetip introduced the market to Cetip | InfoAuto Pagamentos, a product that automates and streamlines the process of validating auto loan guarantees. In August 2012, it officially launched Cetip | Trader, an electronic trading platform for fixed-income instruments developed in partnership with ICE. In June 2013, it officially launched Cetip | Plataforma Imobiliária - Gestão de Garantias (“Real Estate Platform Guarantee Management”), the first product developed by Cetip to make the real estate credit process more efficient, agile and cost-effective.

In April 2016, the Boards of Directors of BM&FBOVESPA and Cetip approved financial terms for the combination of the two companies’ operations. These terms served as a basis for the proposals submitted to and approved by their respective shareholders in special general meetings held on May 20, 2016.

In March 2017 the business combination between BM&FBOVESPA and Cetip was approved by the competent regulatory authorities: the Central Bank of Brazil, the Securities & Exchange Commission of Brazil (CVM), and the Administrative Council for Economic Defense (CADE), Brazil’s antitrust authority.

More information about the history of Cetip can be found in Chapter 7 of the company’s Reference Form.


 

 

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